Telecoms Capex dips 1.3% to $70.2 bn in first quarter

Capital expenditures (Capex) of telecom operators fell by around 1.3 percent to $70.2 billion in the first quarter of 2020, MTN Consulting said.
Telecoms Capex during Q1 2020Revenues of telecom operators dipped 2.2 percent to $446.3 billion in Q1 2020.

Average 12-month capital intensity increased to 16.35 percent in Q1 2020 from 16.31 percent in Q4 2019.

Factors such as government classification of telecom construction as an essential service in many countries, and the shift towards self-installation and automated customer care helped reduce negative effects of the lockdown.

Telecom vendor revenues fell 4.3 percent to $49.5 billion in Q1 2020. Vendor revenues had dropped 4.7 percent in Q4 2019.

Telecom operators have slowed their spending on certain areas such as new fiber rollouts and small cells in central business districts (CBDs) and near event venues. Many increased spending on access and transport network capacity in residential areas to support an uptick in broadband usage.

Deutsche Telekom’s capitalized labor was 18.4 percent of total Capex in Q1 2020, up from 16 percent in Q1 209.

The capitalized labor ratio of BT rose from 36 percent for the 6 months ended Q1 2019 to 40 percent for the 6 months ended Q1 2020.

Many mobile network vendors achieved increase in 5G-related revenues.

Ericsson claimed 86 5G agreements with unique operators and 29 live 5G networks on four continents at the end of March.

Nokia had 70 5G contracts, and 21 live networks by the end of April.

Huawei, Samsung and ZTE did not reveal their latest achievement is 5G network business.

A few telecoms have noted some supply chain constraints on the vendor side that are slowing down planned deployments. Factory shutdowns and friction in the distribution of product are issues for some operators.

Both AT&T and Verizon largely dismissed this as an issue.

NTT and KDDI point to a slowdown in network equipment availability as a constraint on Capex.